Sent: Friday, November 19, 1999
10:34 AM
Subject: Special WTO Series
Dear Friends at ATTAC,
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Jayson
____________________________
IRDF Special Series No.1-99
On the Upcoming WTO Ministerial
Meeting in Seattle, USA
ARE WE READY
FOR THE MILLENNIUM ROUND OF TRADE LIBERALIZATION?
by Hon. Wigberto Tanada 4th District, Quezon Province House
of Representatives Philippines Privilege Speech, House of Representatives
28 September 1999
Mr. Speaker and distinguished colleagues,
In December this year, we shall mark the fifth anniversary
of the Senate ratification of the Philippine membership in the World
Trade Organization. How much has the Philippines gained or lost
in its five years of membership in the WTO? Are Philippine industry
and agriculture in better shape now than before? Have our people,
our workers, farmers and entrepreneurs in particular, benefited
from the WTO? Mr. Speaker, these are basic questions that our negotiators
from the economic cluster of the Cabinet must address before they
commit the Philippines to a new schedule of trade liberalization
measures in the upcoming Millennium Round of new negotiations in
January 2000.
Yet, it is unfortunate that as the preliminary talks for the Millennium
Round kick off in Seattle this November, no imperative consultations
have been set with local industry representatives, agribusiness
firms, labor leaders, peasant groups, NGOs and other stakeholders.
Does such a lack of preparedness indicate a repetition of the mistakes
made in l994? Surely, we have not forgotten how government negotiators
haphazardly exposed many local industries to foreign competition
that led to their eventual demise or collapse. However, five years
after the GATT-WTO ratification, the Philippine economic scene shows
a trend of dismal statistics far removed from the rosy picture of
potential Philippine gains painted by government technocrats during
the 1994 WTO debates.
Jobless growth is no growth Let's take a look at the contrasting
picture of employment. The NEDA and the Department of Trade and
Industry then projected that beginning l995, agriculture would create
500,000 new jobs a year and additional gross value added worth P60
billion a year, while industry, on other hand, would create 587,000
new jobs a year. With the service sector not yet counted and with
the total number of new labor entrants averaging less than a million
a year, it is not difficult to imagine that our unemployment and
underemployment rates would have gone down to almost zero by l997
had these l994 projections materialized.
But what happened was, there was growth in l995-1997 but it was
a jobless growth. Growth was confined to enclave areas of the economy
and in speculative business. In the meantime, many local industries
and agricultural areas collapsed in the face of trade liberalization
and global competition. Even before the Asian financial crisis,
the following industries were already on the decline: beverage,
tobacco, textile, wearing apparel, wood and wood products, furniture
and fixtures, chemicals and chemical products, rubber products,
non-metallic mineral products, basic metals and mining. The worst
to fare was agriculture.
Projected to become a big winner, the entire sector became a big
loser as both its export- and home-oriented sub-sectors such as
sugar and rice collapsed. Thus, every year since l994, our total
agricultural import increased by leaps and bounds, resulting in
ever-widening trade deficits in agriculture. In our first year of
WTO membership, our agri-based trade deficit of $42.24 million in
l994 almost quadrupled, reaching $149.59 million in l995.
In l996, the agricultural trade deficit ballooned to $789.21 million,
and in l997, totaled $764.23 million. Last year, the deficit tapered
down to $669.89 million. Under the globalized trading rules, our
rice imports grew more than ten times from 1993 to 1998, from 201,000
metric tons to 2.2 million metric tons; corn imports swelled by
close to 500 times, from 640 metric tons to 462,000 metric tons;
beef imports by almost 4 times; and pork, 164 times.
Mr.
Speaker, it is obvious that under the WTO, we have become a major
agricultural importer and have lost all hopes of becoming self-sufficient
in, if not a net exporter of, agricultural products. We are now
importing everything - rice, corn, sugar, beef, pork, poultry, fruits
and fishery products. Our food security is now completely dependent
on the availability of importable agricultural products, particularly
cereals. The annual growth rate of agricultural production in the
country is one of the lowest in the region - 0.23 per cent from
l994 to l998, which is indeed devastatingly low compared to our
annual population growth rate of 2.4 percent.
Further, the promise of the so-called liberalization of trade through
the reduction of agricultural subsidies masks the fact that many
developed countries had, at the time of the WTO formation, a very
high level of protection and support, which the GATT Agreement on
Agriculture only helped legitimize. To illustrate, in l997, the
OECD countries extended assistance to their farmers at a staggering
amount of $280 billion under the blue and green box allowable support
measures, whereas our government gave our farmers virtually nothing.
Not content, the OECD even increased this support to $362 billion
in 1998.
Worst, at the height of our economic crisis in l998, the safety
nets promised by the proponents of WTO ratification in l994 were
nowhere to be found. Tens of thousands of workers, mostly contractuals,
were laid off by industry and yet there was hardly any re-training
or upgrading for them. More importantly, there was no meaningful
placement or deployment for them as jobs were truly scarce. The
same thing applies to those affected by El Nino, La Nina and agricultural
trade liberalization. Understandably, the power behind the GATT
ratification in the Senate in 1994, former Senate President Edgardo
Angara, has changed his tune about the WTO now that he sees the
agricultural problems of the country differently as Agriculture
Secretary.
In his speech before the Cairns Group Meeting last August 28, 1999
in Buenos Aires, he said, "(W)hile we ventured into the Uruguay
Round with great optimism that we stand to benefit from agricultural
liberalization, we now enter the next negotiations with some apprehension
that developing countries stand to gain less benefit than what developed
countries would." The GATS challenge Clearly, Mr. Speaker,
our industry and agriculture, and our workers, farmers and entrepreneurs,
suffered the worst in the first five years of WTO. Yet today, we
are being asked to further accelerate the liberalization of the
economy when there is hardly anything left to liberalize.
The target now is the liberalization of trade in services, the last
remaining sector of the economy. From the liberalization of trade
in goods to the liberalization of trade in services, this is the
agenda of the OECD in the Millennium Round. But how ready are we
for the liberalization of trade in services? Who among our government
economic planners and negotiators have prepared a serious study
or comprehensive briefing paper on the General Agreement on Trade
in Services or GATS, which will be the main subject of the Millennium
Round? We have yet to see a shadow of a page submitted to this august
legislature, Mr. Speaker.
This is why I would like to take this opportunity, Mr. Speaker,
to call the attention of our colleagues in Congress, our counterparts
in the executive branch, our industry captains, our labor and peasant
leaders and our people as a whole, to the fact that the coming years
will witness the liberalization of the service sector - which in
effect means the total liberalization of the economy. If we are
to come out a winner under globalization, we need to forge and implement
with decisiveness a readiness program, something which we failed
to do in l994 in the naive belief of some economic technocrats that
the liberalization of the economy automatically leads to growth
and prosperity.
What is this agreement called GATS? GATS is the General Agreement
on Trade in Services or GATS, one of the dozen or so multilateral
agreements under the WTO. The best known agreements are, of course,
the General Agreements on Tariff and Trade (GATT) on goods, both
in industry and agriculture, and the Trade-Related Intellectual
Property Rights (TRIPS). Somehow, GATS has been relegated to the
background in many official and non-official discussions. This is
so because the commitment of the Philippines to GATS, like those
of other countries, is largely on a standstill basis, that is, the
non-adoption of measures that would restrict trade in services.
But this is precisely the objective of the GATS proponents, principally
the United States and the United Kingdom, which is firstly, to encourage
first the WTO member countries to accept the idea of including under
WTO a multilateral agreement on trade in services, and second, to
work later for the liberalization of the sector which they will
be doing in the coming years starting year 2000. However, the implications
of GATS on the Philippine economy are too serious to be ignored.
The pact covers almost everything in the service sector - Business
services, including professional services Communication services,
including telecommunication and audiovisual services Construction
and related engineering services Distribution services Educational
services Environmental services Financial services, including insurance
and banking services Health-related and social services Tourism
and travel-related services Recreational, cultural and sporting
services Transport services, including maritime, waterways, air
and road transport. The only category of services excluded from
the coverage of GATS are services supplied "in the exercise
of government authority."
However, even this exception is limited as the Agreement stipulates
that when a government "acts on a commercial basis and/or as
competitor with other suppliers," its activities shall be treated
like those of any private supplier. Under GATS, the trading of services
will intensify, particularly through the liberalization of the entry
of foreign banks and other service providers. Further, GATS liberalizes
the movement of professionals and technical personnel employed by
a service supplier, like lawyers, engineers, architects, doctors,
designers and so on, even if we have these professionals and technical
personnel in large number.
In short, providers of banking service, tourism service, accountancy
service, legal service, engineering service, construction service,
educational service and so on can readily invade our economy under
GATS. Needed: A review of TRIPS Mr. Speaker, another questionable
agreement is the Trade-Related Intellectual Property Rights (TRIPS),
which basically goes against the GATT principle of free trade as
it is downright protectionist. It seeks protection for the technology
developed by the West, including patents on herbal plants of the
East registered in the West by their researchers and scientists.
Recently, our newspapers were filled with stories on bio-piracy
committed by Western researchers against the Philippines and India.
It appears that the main objective of TRIPS is to restrict the flow
of technology and information, by making it expensive for developing
countries to access the same. This, plus the verifiable observation
that developed countries have been incessantly sourcing from the
flora, fauna and indigenous knowledge of third world countries and
peoples materials that have tremendous commercial viability. This,
in effect, is transfer of technology in reverse. But the country
and its people never get to be adequately compensated, if at all.
In fact, it is worth mentioning here that the existing Intellectual
Property Rights (IPR) code is one major reason why the cost of medicines
has gone up. Compulsory licensing has been deleted in the TRIPS
agreement. At the very least, it should be allowed for essential
drugs like antibiotics. Dr. Romeo Quijano of the UP College of Medicine
made some calculations during the 1994 GATT debates that the medicine
used for TB (rifampicin), which cost P12, can be produced by our
local pharmaceuticals at a cost of P2.70 had compulsory licensing
been allowed. This could have saved 20,000 lives if prices were
allowed to go that low to combat TB.
Let me quote Dr. Quijano on the real status of these so-called IPRs:
"About these so-called intellectual property rights, I do not
think that they are rights at all. They are privileges given by
society. They are not even intellectual because the underlying principle
behind them is greed. Greed does not govern an intellectual. It
is service to society that drives one. Those who discovered important
things like antibiotics did not have greed as a driving force. IPRs
only appeared when corporations entered the scene and appropriated
these inventions.
They should not have exclusive rights to these inventions because
many of these products are naturally occurring. There is also a
societal contribution to the materials used by inventors or discoverers."
(IPR Sourcebook, published by MODE and UPLB College of Agriculture,
1994) It is fairly obvious, Mr. Speaker, that under the so-called
rules of the WTO, the world has become even more unequal, with the
poor countries becoming poorer, precisely because of the one-sidedness
of these rules and the unevenness of the so-called global playing
field.
This is the reason why the l999 UNDP Report is now saying that globalization
is creating new threats to human security and why it is thus calling
for new rules to govern the global economy. Two major areas of concern
Mr. Speaker, I do not want to sound alarmist and pessimistic, but
this is the real situation prevailing under the brave new world
of WTO. The fact is, our economic performance under the WTO concretely
shows that we have failed to achieve the rosy projections painted
by the proponents of our membership in the WTO. One reason for this
is that the WTO rules are lopsidedly in favor of the developed countries.
Another reason is that we still have not developed a competitiveness
plan that will enable our country to surmount the challenges of
globalization under WTO. There are two major areas of urgent concern
that need to be addressed now. The first, as I have mentioned, is
the upcoming GATS which will open up wholesale our service sector.
The second is the deepening crisis in local industry and agriculture.
If we do not prepare for GATS and the Millennium Round, the Philippine
service sector is bound to suffer, just like what has happened to
our local industry and agriculture during the last five years. And
if we are not ready, this time the impact will be much worse, for
the simple reason that the service sector is now the largest employer,
way ahead of the agricultural sector.
Of course, there are some opportunities, too. For example, we are
a major exporter of workers providing services overseas. However,
the GATS still does not recognize the movement of workers for overseas
employment in contrast to its recognition of movement of personnel
of service-providing companies. Such recognition could have benefited
us as it would have strengthened the rights of Filipino workers
working overseas. Unfortunately, our past negotiators were either
too weak in getting the commitment of other countries on this or
were no match to the negotiating skills of the OECD negotiators.
We also have high potentials in some service industries such as
education, medical, recreation, sports, computer programming, cultural
and tourism services. But, unfortunately again, we have not strengthened
these service industries. For example, two or three decades ago,
we were the favorite destination of Asian students pursuing specialized
studies in agriculture, medicine, veterinary medicine, English,
etc. Today, Australian universities are cornering many of these
students, while the regional standing of our universities, including
the University of the Philippines, appears to be declining. Now
what are the problems facing us under GATS?
First, our service sector companies, undeveloped as they are, are
no match to the financial strength and global reach of service TNCs.
It should be pointed out that a large part of the service sector
is really informal, where most of the so-called micro enterprises
and urban poor can be found. The problem of readiness of local service
providers can easily be seen in the financial sector, where the
leading companies are those with an international network and a
mastery of the emerging business called e-commerce. Second, we have
undeveloped technology infrastructure. This is crucial in the liberalization
of trade in services, which is highly dependent on information highways.
Third, we have problems related to our sovereignty as a nation.
The presence of foreign banks, insurance companies, telecommunications
firms and similar commercial entities with vast capacity to monitor
the economic performance of the country means foreigners will have
a better mastery of our own economy compared to our own local industry
players and even the government Now, what about the problems in
local industry and agriculture, which have both been in crisis since
l995? In the coming years, both sectors will be totally liberalized.
For example, the garments industry, the country's biggest employer,
will lose whatever protection it presently enjoys under the Multi-Fiber
Agreement (MFA). Is the garments industry ready for total liberalization?
It appears not, as indicated by the number of garments companies
which have closed down, or transferred to cheaper-producing locations
such as China, Vietnam, Laos, India, Pakistan, Bangladesh and even
Nicaragua. If the industry is unable to upgrade itself in time,
we are bound to see a rampaging flood of company closures. Right
now, we see other industries reeling from the effects of globalization
and the Asian financial crisis.
The steel industry is now comatose, no thanks to the influx of cheap
Russian steel. The chemical industry is also semi-comatose, also
no thanks to the influx of cheap Chinese chemicals. The cement industry
has almost collapsed because of the dumping in the domestic market
of cheap Indonesian cement but was saved only by new foreign buyers.
Yet, the list of endangered industries goes on and on. In the agricultural
sector, the future is also bleak, in the light of the fact that
many of the tariff rates pegged at 50 to 100 percent for major commodities
have to go down under the WTO schedule. The AFMA or the Agriculture
and Fisheries Modernization Act is of little help as it is still
not fully in place, given the budgetary crisis during the last two
years. And yet, the irony of ironies is that many of our local economic
technocrats are still pursuing their naive belief that the accelerated
opening of the economy is the best solution to our economic woes,
when, in truth, this mad and anarchic economic liberalization program
is at the roots of our crisis.
Moreover, records show that we have been "out-liberalizing"
the other countries. Some of our tariff rates are much lower than
those of Thailand and Indonesia, while some of the restrictions
we have on certain industries are more liberal than those of Malaysia.
As to GATT's so-called built-in safety nets and safeguards, these
do not seem to be working for us. We have recently amended our anti-dumping
law. However, despite clear, acceptable and proven evidences of
dumping, the said law still gives the Tariff Commission the option
not to impose an anti-dumping duty should consumers' interest be
threatened.
It likewise compels anti-dumping protestors to file a prohibitive
surety bond. Filing an anti-dumping case, which naturally requires
the services of lawyers, is also costly. The safeguard measure that
can mitigate the negative impact of import surges is again another
futile measure. Under the rules, the aggrieved party must be able
to prove that the increased imports have caused, or threaten to
cause "serious injury" to domestic industry. How serious
injury shall be defined, we do not know. But what takes the cake
is that the country utilizing a safeguard measure must also offer
compensation with equivalent concessions in foreign trade.
As to the safety nets for our workers, farmers and entrepreneurs,
the nets are unable to save the workers from losing their jobs and
in finding new ones, or in generating sustainable incomes for our
farmers, or even ensuring the basic survival of the Filipino businessman.
Call of the times In conclusion, Mr. Speaker, clearly, we need to
do a lot more but "more" is not what is being done. This
representation thus firmly urges that we in Congress launch a major
program to re-think our strategy of economic liberalization and
require caution against all-out blind participation in the WTO.
No, I am not suggesting that we cut off our economic ties with the
outside world and transform the Philippine economy into an island
unto itself, isolated and oblivious to what is happening elsewhere.
What I am suggesting is that we need to fine-tune our economic weapons
in order to have a fighting chance in this game called globalization
and overcome the unfair features of the rules of the WTO. This,
we need to do to ensure that jobs and incomes will indeed be generated
for the benefit of the millions of our countrymen. Mr. Speaker,
we need to undertake in this Congress a total review of the social
and economic impact of our five years of membership in WTO. In the
meantime, we need to convince the Executive Branch to come up with
a more pro-Filipino and pro-poor agenda in the coming Seattle and
Millennium talks. In this agenda, the Philippines should bat for
the following:
1. A call to an end to the expansion of
WTO powers, until new, clearer and more equitable rules on international
economic governance are put in place, as suggested by the UNDP itself.
Hence, no new issues should be launched at the Seattle meeting.
2. An endorsement of the position taken by the African
Group at WTO to make sure that the patenting of all life-forms is
disallowed as well as for the deferment of the implementation of
TRIPS in year 2000.
3. A call on the Seattle meeting to
initiate a process to review, reform and repair the unjust and unequal
provisions of existing WTO agreements based on the developing countries'
collective experience in the last five years.
4. A call
for the exemption, in developing countries, of food produced for
domestic consumption and the products of small farmers from the
Agriculture Agreement's disciplines on import liberalization, domestic
support and subsidies.
5. The inclusion of an amendment
allowing developing countries the right to a "local content"
policy to help build their domestic industrial sector. Mr. Speaker,
it is not yet too late for the Philippines to act now and save its
dying industrial and agricultural sectors. It is not too late to
become a voice for the ASEAN in the upcoming GATT-WTO Millennium
Round. We are in the midst of a global economic war. If we do not
get organized not only as a nation but as a group of nations for
this globalization war, we are endangering the very future of this
country and our region. Let us look to our own survival. The future
will not wait. Thank you, Mr. Speaker. Resource Center for People's
Development
#24, Unit 7, Mapang-akit St, Pinyahan, QC,
Philippines
telefax- (632)4361831
tel - 4350815
email:
rcpd@info.com.ph |
